Page 1

BCQS

CARIBBEAN CONSTRUCTION

market trend REPORT 2010 4Q 2009 - 1Q 2010


2

MARKET TREND

REPORT


BCQS


Foreword: WELCOME TO THE FIRST PUBLISHED EDITION of our Caribbean Construction Market Trend Report which covers the fourth quarter 2009 to the first quarter 2010.

BCQS

4

MARKET TREND

REPORT

International has been an established cost and value consultant in the Caribbean construction and property industry for over forty years, during which time we have built on our reputation as the leading independent consultant of our kind in the region. With an ever increasing and diversifying Client base, and with a wealth of regional in-house knowledge, this report offers a guide to construction costs and variances throughout the region. Going forward, we intend to update our ongoing cost research on a quarterly basis, releas-

ing our findings in an annual published report, which we believe will be a valuable initial source to fellow construction professionals, builders, established and first time developers, lending institutions, and indeed, anyone who has an interest in, or reason to follow, the construction industry in the Caribbean. In time, the information within this report will enable the reader to analyse market trends, and give some indication of specific as well as general cost patterns and nuances within the region. In order to keep our information accurate, succinct, and possible to update quarterly, we have chosen to research ten jurisdictions within the region, which, in our opinion, are representative of the English and Dutch-speaking Caribbean. Knowledge captured from our six regional offices, namely the Bahamas, Barbados, British Virgin Islands, Cayman Islands, St. Lucia and the Turks and Caicos Islands has been supplemented by on the ground expertise from fellow professionals in our associated office in Jamaica. This report does not attempt to comment on markets such as Puerto Rico, the French West Indies, Cuba or Haiti, which have specialised construction markets which are not neces-


sarily reflective of the remainder of the region, be they tied directly to other markets or have a constitution otherwise not reflective of the regional market. However we are mindful of other relevant economies such as The Dominican Republic and Guyana, which we intend to include within our next report. The indices contained herein not only show escalation costs for building materials, plant and labour, which reflect market trends, but also consolidate useful information on general costs per square foot of various types of construction as well as local and regional sales and rental rates. We have also researched each jurisdiction in order to provide useful information regarding general statistics, government and GDP information, cost of living types as well as tourism types and numbers. We believe that this supplementary information helps to form a clearer picture of the countries involved . While there is various information available to the market, BCQS has identified a need for consolidated, accurate and concise presentation of construction costs in order that existing and potential clients may make informed decisions at the feasibility stage of their projects.

This is fundamental to our approach to project delivery and whilst this report is not intended to replace the requirement for cost control services after project inception, by presenting the indices contained herein, we hope to encourage informed development within the region and to foster new relationships. We further hope that this report will be of benefit to the English and Dutchspeaking Caribbean construction industry as a whole. Whatever your role or position in the construction and property industry, we hope that you find our first Caribbean Market Trend Report of interest and that the information presented is of value to you. In order to continuously improve our service to our Clients, we would welcome any constructive comments which will help us to ensure that our report remains of maximum value to those who read it.

BCQS International St Lucia, March 2010

BCQS


Market Overview:

The year

6

MARKET TREND

REPORT

of 2009 will not be remembered favourably in terms of roll-out of successful construction projects. Indeed, globally, and the Caribbean is no exception, the tightening of finance has resulted in many projects being put ‘on-hold’ or in some cases, written off as unviable in the short term. Even experts in economics, property, housing and finance have been cautious in their predictions for the short and long term economic well being of the global economy. This uncertainty, in turn, is reflected in the property and construction industry in particular, which traditionally, is a leading proponent, and major economic indicator. The Caribbean cannot and does not expect to be an exception to this global rule. A large proportion of revenue comes directly from

tourism related developments. In 2009, tourism provided the region with 10% of government revenues, 14.5% of GDP and 12% of regional employment. A reduction in tourist numbers has seen a knock-on effect in construction, primarily in tourism related developments, but there is also concern that the impact of reduced governmental revenue will further affect investment in public projects. GDP within the English and Dutch speaking Caribbean has fallen by 1.2% over 2009, partly due to the reliance on tourism in most jurisdictions. Those countries such as Trinidad which also rely on natural resources are generally more affected by commodity prices than tourism numbers. Notwithstanding this, some jurisdictions are coping better than others. Well administrated established markets are able to keep moving, albeit at a slower pace, where capital has been introduced to the market in terms of governmental and public utilities projects. The same markets also tend to have sustainable tourism development which does not rely on an economic upturn. Those markets that seem to have suffered the most, are those that have experienced expeditious growth in the boom years, and now


find that the goal of realising values enjoyed by their neighbours are unachievable, at least in the short term. A general pattern emerges, that the second home market from North America and Western Europe has reduced significantly, leaving a number of developers competing with each other in appealing to a dwindling demographic. However, a confidence remains in projected tourism figures, and there is a belief, at least in most jurisdictions, that things will return to a semblance of ‘normality’ towards the end of 2010. As such, a lot of sellers and developers are still holding on and following sales markets closely. One thing is for certain, however, and that is the impact to the region has, in the least, been tangible, and the effects are continuing to be felt throughout 4Q 2009 as well as into 1Q 2010. A cautious buying market is now also seemingly wary of the condo/hotel business model of paying for the financing of construction projects through pre-sales and stage payments. This should change the pattern of development in years to come. Markets such as the Dominican Republic have suffered less than other markets due to the

diversified tourism industry, ranging from charter to high end, with a varied landscape and a plethora of attractions for all types of tourists and investors. Current economic indicators predict that those countries which can look forward to real growth in 2010 are led by Guyana and Trinidad & Tobago. Interestingly, neither of these countries rely on tourism as their primary income, and their natural resources and commodity based economies would suggest that those other countries which rely on tourism may have a longer recovery period before positive economic growth is experienced in their own jurisdictions. Construction costs have stabilised in contrast to recently experienced expeditious growth. Our findings further show that lower commodity prices have resulted in the reduction of first cost prices of some core materials such as copper and aluminium as well as aggregate and sand in some areas. This leads to an overall reduction in construction costs. Whilst construction activity is much reduced, our findings show that labour rates have only reduced slightly throughout 2009, even though there are fewer construction employment opportunities. We will monitor this trend through our quarterly research.

BCQS


Summarised Findings:

What

8

MARKET TREND

REPORT

has become clear is that there is a great variance between our ten chosen jurisdictions in terms of construction costs and subsequent rental and sales values. A pattern emerges generally in that the higher a country’s GDP/ head, the higher the construction cost, and in turn the higher the rental or sales value upon completion. An exception to this rule is the Turks and Caicos Islands, where the GDP is amongst the lowest, whereas construction costs are generally amongst the highest. This suggests a wide gulf between the country’s lowest and highest earners, and indicates that a high income minority are involved in the development and subsequent sales and rental of domestic, hotel and commercial property. Throughout the region, of all the types of

construction, office buildings show the greatest variance in terms of cost/square foot, although high quality residential also varies greatly region to region. Whilst labour and material costs are a major factor, this may also be dependent on levels of finishes, millwork etc. chosen by the individual client. Commercial developments in the Cayman Islands are noticeably higher as a comparable percentage to other construction costs. This is due to client driven demand for greater hurricane protection following Hurricane Ivan in 2004, which has resulted in stricter building standards for such buildings and therefore increased construction cost. Our findings demonstrate individual vagaries regarding specific building materials. For example sand is found to be expensive in the BVI, while this is true of paint in the Turks and Caicos Islands. Such items would suggest that the suppliers of these items have little business competition so therefore do not have to be competitive in a market which would otherwise demand commercially priced materials. Raw materials such as aggregate and sand are a lot cheaper as a percentage of total build cost in Jamaica


against other building materials, which points to the fact that these raw materials can be produced on island, whilst finishes materials need to be imported. In Trinidad, the same is true of similar products, as well as steel. Those smaller islands which manufacture little or no raw or finishing building materials, need to import all their goods, which in turn attracts greater costs in the form of shipping, brokerage, and duty. Luxury items (some finishes, specialist millwork, appliances etc.) are taxed heavily in most jurisdictions, the cost of which filters directly through to the consumers of the construction market. Labour costs demonstrate a significant variance, country to country. For example, a labourer in BVI can expect to earn six times as much as a labourer in Jamaica, whilst a plumber in Barbados earns half that of a plumber in Cayman. Construction equipment costs are generally more in line on a country by country basis than other construction elements. In countries such as the Turks and Caicos Islands or the Bahamas, construction costs can vary island to island, with more remote islands attracting higher costs due to transportation of labour, plant, material and accommodation for

labour. Even where the country consists of a sole island, such as St. Lucia, costs can vary depending on a number of factors, including geographic location, accessibility of the site and proximity to ports. Natural disasters such as hurricanes or earthquakes can have an immediate effect on construction prices, even if the disaster did not occur in that particular jurisdiction. During the highly active hurricane season of 2005, for example, building materials such as plywood and roof finishing materials increased in price and therefore directly affected neighbouring countries relying on the same supply chain. World economics also plays a leading role, for example the price of oil falling from US$150/ barrel to US$50/ barrel in a matter of months over the last two quarters of 2008. 2009 has seen an overall reduction in construction costs, partly due to reduced commodity prices. Another main factor is due to the competition for work which has forced contractors to take a more commercial approach in their pricing of bid documents. Reduced profit allowances and minimised labour day rates make a contractor more likely to win work and therefore better positioned to keep a positive cashflow.

BCQS


General and Government Statistics: COUNTRY

LOCAL CURRENCY

LAND AREA

CAPITAL CITY

POPULATION

EXCHANGE RATE

NR. PERSONS

GDP

GDP/

EMPLOYED

(MILLIONS),

CAPITA (US$),

2008

2008

TO US$1.00 BAHAMAS

BSD 1.00

10,010 Sq. KM

TURKS AND CAICOS

USD 1.00

CAYMAN JAMAICA

KEY INDUSTRIES (EXC. CONSTRUCTION)

Nassau

309,156

191,595

9,228

27,394

948 Sq. KM

Cockburn Town

36,605

12,000

845

6,400

KYD 0.82

264 Sq. KM

Georgetown

49,035

23,450

1,939

43,800

JMD 88.55

10,831 Sq. KM

2,825,928

1,304,000

20,958

7,766

BVI

USD 1.00

151 Sq. KM

Road Town

24,000

12,770

840

38,500

ST. MARTIN

EUR 0.69

(Fr.) 53 Sq. KM

Marigot

29,820

ST. MAARTEN*

ANG 1.79

(Neth.) 34 Sq. KM

Philipsburg

43,072

See Curacao

See Curacao

See Curacao

ST. LUCIA

XCD 2.71

606 Sq. KM

Castries

160,765

79,700

1,830

10,819

Tourism, Manufacturing, Agriculture

BARBADOS

BDS 2.00

430 Sq. KM

Bridgetown

279,000

175,000

5,244

19,026

Tourism, Sugar, Light Manufacturing

TRINIDAD & TOBAGO

TTD 6.33

5,128 Sq. KM

Port of Spain

1,305,000

624,320

27,038

20,723

Petroleum, Chemicals, Food Processing

ANG 1.79

444 Sq. KM

140,796

91,470

2,800

16,000

Tourism, Petroleum Refinement, Petrol’ transhipment

CURACAO (Neth. Antilles)*

10

MARKET TREND

REPORT

Kingston

Willemstad

Tourism, Finance, Cement Tourism, Finance Tourism, Finance, Insurance Tourism, Bauxite/ Aluminium, Agro-processing Tourism, Finance Tourism, Light Industrial/ Manufacturing, Heavy Industry

Note: In researching the above statistics, we have found that various governmental and private sources differ from each other to a lesser or greater degree. In the interests of ongoing consistency, we have largely relied upon information issued by The Caribbean Community (Caricom) Regional Statistics Secretariat (2008). * Netherlands Antilles = source U.S Department of State http://www.state.gov/r/pa/ei/bgn/22528.htm; CIA World Fact Book https://www.cia.gov/library/publications/the-world-factbook/geos/nt.html


BCQS

Cost of living indicators: ITEM

DESCRIPTION

UNIT

BAHAMAS

TURKS &

CAYMAN

JAMAICA

BVI

CAICOS

ST.

ST LUCIA

B’BADOS

TRINIDAD

CURACAO

AVERAGE

MAARTEN

1

City Water

$/gallon

0.012

0.034

0.019

0.005

0.012

0.013

0.010

0.010

0.020

0.031

0.020

2

Electricity

$/kwh

0.15

0.36

0.33

0.29

0.25

0.31

0.32

0.11

0.34

0.40

0.29

3

Gasoline

$/gallon

3.95

4.25

4.76

3.41

3.45

1.85

3.70

3.00

2.86

4.85

3.34

4

Income tax, personal

%/income

0.0%

0.0%

0.0%

33.0%

14.0%

24.0%

30.0%

27.5%

25.0%

25.0%

18.0%

5

Income tax, corporate

%/income

0.0%

0.0%

0.0%

33.0%

0.0%

25.0%

33.3%

25.0%

35.0%

34.5%

19.0%

6

Import duty on building materials/ essential

% (average)

30.0%

48.0%

20.0%

40.0%

12.5%

0.0%

30.0%

20.0%

20.0%

15.5%

24.0%

7

Import duty on luxury goods

% (average)

42.0%

60.0%

40.0%

43.0%

20.0%

0.0%

75.0%

62.5%

20.0%

32.0%

39.0%

8

Stamp duty on property transfer

%

10.0%

9.8%

7.5%

3.0%

8.0%

3.0%

0.0%

1.0%

7.5%

4.0%

5.0%

9

Real estate commission on property sale

%

10.0%

8.0%

6.0%

6.0%

7.0%

7.0%

5.0%

4.0%

5.0%

2.5%

6.0%

10

Vendors tax on property transfer

% (average)

0.0%

0.0%

0.0%

3.0%

0.0%

0.0%

7.5%

2.5%

5.0%

0.0%

2.0%

11

Lawyers fees on property sale

%

2.5%

1.0%

0.50%

4.0%

1.5%

2.0%

1.0%

2.0%

1.5%

1.5%

2.0%

Note: Indicators such as water, electricity and especially gasoline are all subject to fluctuations but are indicators of cost levels at the time of writing. Where figures vary depending on value or type of goods or services, such as import duty on building materials, or stamp duty on property transfer, then a medium average has been calculated.


Country by Country Guide: LOCAL KNOWLEDGE : GLOBAL EXPERIENCE Bahamas, Turks and Caicos, Cayman Islands, Jamaica, BVI, St Maarten, St Lucia, Barbados, Trinidad and Tobago, Curacao

12

MARKET TREND

REPORT

BAHAMAS The Bahamas traditionally relies on US tourism and trade to sustain its economy. As such, the economic recession in the USA has had a significant effect on the Bahamas since last quarter 2008. The Bahamian Government has continued to stimulate the economy through capital investment, and the completion of the deep water harbour in Nassau has enabled an increase in the size and volume of visiting cruise ships to New Providence. The expansion work at Lyndon Pindling International Airport is continuing as is the development of the new National Sports Stadium. Regeneration of the Bay Street area in downtown Nassau has seen the commencement of the Straw Market and the planned re-location of the commercial port facilities away from Bay Street to Arawak Cay. The recent re-branding of the Emerald Bay Resort by Sandals will provide much needed stimulus to the Exuma Islands.


BCQS TURKS AND CAICOS

CAYMAN ISLANDS

As well as the decrease in numbers of second home buyers, TCI has suffered from other factors as well. The week-long presence of Hurricanes Hannah and Ike resulted in severe flooding and loss of property, particularly in the nation’s capital, Grand Turk. This was exacerbated by the suspension of the government, some months afterwards, due to serious allegations of corruption. After an unprecedented boom period, during which time, many high quality resorts and homes were built, the TCI looks set for a correctional period as a number of abandoned building sites dominate otherwise outstandingly beautiful beachfront. This natural commodity is extensive in TCI, and the economy will look to recover through tourism and related industries. Two hospitals have been finished in early 2010 under the first PFI project in the region. It is further hoped that the proposed airport runway and terminal expansion in Providenciales will provide a major boost to the tourism industry.

Cayman, like the majority of jurisdictions in the region has experienced a significant reduction in major construction projects, particularly in the private sector. Currently, the only major projects underway are the two Government high schools and the Government office accommodation project. The recently elected Government has announced plans for three new major projects, a cruise ship berthing facility in George Town, a new cargo facility at the east end of the island and the redevelopment of Owen Roberts International Airport. Plans have also been announced for the development of a major healthcare facility and an oil refinery, both in the eastern districts. Additionally, private sector development is set to pick up this year with the Seven Mile Beach Watercolours condominium development and further commercial retail/office space due to commence at Camana Bay.


14

MARKET TREND

REPORT

JAMAICA

BVI

Although still in recovery mode, the government continues to enhance the public infrastructure through both civil and residential projects across the island. Works continue on the North-coast highway project and The R. A. Murray and Mabey & Johnson Priority Bridge Programmes delivering 80 bridges in the next three years. The National Housing Trust is working to start construction on a number of housing solutions across the island increasing the current housing stock by in excess of 2,000 units by 2012. Projected growth in GDP coupled with a reduction in interest rates through the new Jamaica Debt Exchange programme, should stimulate activity in the private and real estate sectors by providing investors with a more viable form of investment through construction and real estate activity.

The BVI government is initiating a change to a greater emphasis on heritage based tourism, resulting in plans for restoring local points of interest including the Copper Mine in Virgin Gorda, the Callwood Distillery and the Lower Estate Sugar Works. Having encouraged organic tourism growth as a matter of policy, the BVI has suffered less than its neighbours and continues to host a healthy and sustainable construction environment. Construction projects which have either been completed or are scheduled to be completed in 2010 include Oil Nut Bay, which opened in 2009, Scrub Island and the Anegada Water Project. Ongoing works include a new hospital, and improvement works to Virgin Gorda Airport. To date, the BVI has fared the recession well.


BCQS ST MAARTEN

ST LUCIA

Being divided between French and Dutch speaking sides, the island of St Maarten has seen tourism related growth over the past decade in terms of hotel beds and airlift. Both sides of the island enjoy the benefits of cultural diversity in their tourism-related industries. However, two high profile hotel construction projects have been stalled due to global economic constraints, namely The JW Marriott and The Hyatt. Whilst this shows that construction activity in St Maarten has inevitably slowed down in line with worldwide events, the islands high profile and diverse tourism market enables it to position itself well in the regions forecast upturn in trade and tourism. St. Maarten’s geographical location further enhances this potential by being within close proximity to many of the regions wealthier islands.

Following a growing confidence in investment leading up to the downturn in 2008, St. Lucia’s construction sector has undoubtedly suffered in 2009, meaning a lot of intended projects have remained on the drawing board. A number of projects under construction have also slowed down or been halted due to funding constraints. However, confidence seems to be returning as a number of tourism related sales have gone through towards the end of 2009 and into 2010. A government with high expectations has indicated the recommencement of Le Paradis, the ongoing development of Point Hardy, Cotton Bay Resorts and L’Avant Mer. New projects include commencement of works at Hotel Chocolat and improvement of infrastructure and services at the International Airport. The new national hospital, which is under construction, adds to this impressive portfolio.


16

MARKET TREND

REPORT

BARBADOS

TRINIDAD AND TOBAGO

Up until the fourth quarter 2009, a number of tourism-related construction projects were put on standstill due to the global recession. Over the last quarter of 2009 some developments showed signs of starting in 2010/2011. There are a number of promising projects for the next two to three years which with the aid of overseas funding should help boost the economy of Barbados. Amongst these are the completion of the Four Seasons Development & Marina works at St. Peter’s Bay, which is scheduled for completion early 2011, and the Beachlands development, with an anticipated start date of mid-2010. Established projects such as the Villas at Royal Westmoreland are ongoing.

The global economic downturn affected both the public and private sectors in Trinidad and Tobago, but construction works have continued. This may be attributable to the extensive development plan set out by the Government of Trinidad and Tobago named “Vision 2020” encompassing a number of construction projects which aim to allow for a steady flow of construction throughout the twin nation. Projects underway include, the Academy for Per forming Arts, and the upgrades of both Maracas Beach Facility and Scarborough Hospital. In the private sector, the Carlton Savannah Hotel was completed during the fourth quarter 2009 and the Star Hotel is scheduled to open in October 2010.


BCQS CURACAO Curacao suffered less than most of the region in 2009, in part due to the geographical diversity of its tourism market, drawing many visitors from both South America and Northern Europe, and not relying as heavily on American markets as do some of the more northerly Caribbean nations. The construction industry has been supported in recent years by two major hotel projects, the recently completed Renaissance Hotel and Retail Mall/ Cinema, situated adjacent to the cruise ship terminal in Willemstad and the 350 room Hyatt Regency Hotel and Resort at Santa Barbara Plantation, which is due for completion mid2010. Curacao’s diversity, its geographical location and its political standing as an island of the Netherlands Antilles has proved beneficial to the island in a difficult economic climate.


Tourism:

Summarised

18

MARKET TREND

REPORT

findings for 2009 show that the Caribbean continues to suffer from the global downturn in the tourist industry. Sources from the regional press have described Jamaica and Saba as being notable exceptions for 2009, these two Islands being amongst the few within the Caribbean to achieve positive growth. Anguilla, BVI, St Maarten and the Bahamas have been described as being the worst affected, with tourism numbers falling through 2009 from between 15% and 25%, interestingly, all countries which cater to highend tourist markets. Countries such as the Dominican Republic with varied tourism streams, such as high-end, charter, cruise etc. look forward to positive forecasts in 2010.


BCQS

The following table and chart demonstrate ‘stay over’ tourist figures for 2009, adjusted where applicable. BAHAMAS

TURKS &

CAYMAN

JAMAICA

BVI~

CAICOS~

ST.

ST LUCIA

B’BADOS

MAARTEN

TRINIDAD &

CURACAO

AVERAGE

TOBAGO

1

United States

No. Persons*

1,206,114

170,000

212,711

1,183,614

270,000

238,856

97,697

114,640

190,358

34,581

371,857

2

Canada

No. Persons*

110,891

30,000

15,884

280,002

11,000

29,624

27,149

57,233

49,848

5,581

61,721

3

Europe

No. Persons*

84,699

25,000

18,420

273,335

50,000

95,075

84,553

216,317

64,790

143,753

105,594

4

Other

No. Persons*

74,009

30,000

19,120

91,594

25,000

67,244

65,820

114,104

112,054

172,807

77,175

1,475,712

255,000

266,135

1,828,544

356,000

430,800

275,219

502,294

417,050

356,723

616,348

Totals

* Numbers of arrivals are pro rata’d for the entire year from available information at the time of writing, which generally covers months Jan - Sept/Oct; sources: Various ~ Estimated figures due to insufficient current information


Indicative Construction Costs: (Median averages from range)

BAHAMAS

TURKS &

CAYMAN

JAMAICA

BVI

CAICOS ITEM

DESCRIPTION * See Page 33

ST.

ST LUCIA

B’BADOS

TRINIDAD

CURACAO

AVERAGE

MAARTEN

UNIT

1.06

1.29

1.13

0.67

1.12

1.00

1.00

1.12

0.83

0.72 254.5

1

High quality residential

Median /SF

225

250

300

190

350

225

250

325

230

200

2

Medium quality residential

Median /SF

170

180

170

120

250

175

150

175

140

120

165

3

Modest quality residential

Median /SF

130

140

120

80

150

120

100

125

100

80

114.5

4

Storage or warehouse structures

Median /SF

85

70

75

60

100

90

80

75

80

70

78.5

5

Retail, single-storey

Median /SF

140

160

135

80

120

100

100

135

100

80

115

6

Offices, one to three storey, shell

Median /SF

120

140

185

60

150

90

80

175

80

70

115

7

Offices, one to three storey, inc. fitout

Median /SF

200

220

305

100

180

125

120

225

120

100

169.5

8

High rise 4 to 8 stories, shell

Median /SF

160

200

245

70

220

175

90

150

90

80

148

9

High rise 4 to 8 stories, inc. fitout

Median /SF

250

280

365

110

250

200

135

250

130

110

208

10

Specialist offices

Median /SF

270

300

365

90

250

125

110

300

110

90

201

11

Hotels/ Condos, Five star urban

Median /SF

300

320

350

200

350

190

220

300

210

180

262

12

Hotels/ Condos, Five star low-rise

Median /SF

325

350

365

200

350

200

220

250

210

180

265

13

Hotels/ Condos, Three star economy

Median /SF

200

225

185

130

200

180

150

175

140

120

170.5

20

MARKET TREND

REPORT

All values in US$


Indicative Construction Costs:

BCQS


Average Rental and Sales Values: (Median averages from range)

BAHAMAS

TURKS &

CAYMAN

JAMAICA

BVI

CAICOS ITEM

DESCRIPTION * See Page 33

ST.

ST LUCIA

B’BADOS

TRINIDAD

CURACAO

AVERAGE

MAARTEN

UNIT

1.06

1.29

1.13

0.67

1.12

1.00

1.00

1.12

0.83

0.72

1

High quality residential

Sales $/ SF

550

450

450

360

750

500

450

600

430

370

491

2

Medium quality residential

Sales $/ SF

350

300

250

180

350

300

225

250

200

180

258.5

3

Modest quality residential

Sales $/ SF

150

170

200

100

200

175

120

150

120

100

148.5

4

Storage or warehouse structures

Rental/SF/ PA

22

10

22

10

16.5

22

16

10

20

10

15.85

5

Retail, single-storey

Rental/SF/ PA

45

35

36

30

20

26

25

40

30

30

31.7

6

Offices, one to three storey, shell

Rental/SF/ PA

40

25

40

10

20

24

22

25

20

10

23.6

7

Offices, one to three storey, inc. fitout

Rental/SF/ PA

31

35

50

20

28

33

30

35

20

20

30.2

8

High rise 4 to 8 stories, shell

Rental/SF/ PA

32

25

40

20

25

26

22

25

20

20

25.5

9

High rise 4 to 8 stories, inc. fitout

Rental/SF/ PA

36

35

50

20

40

35

30

35

20

20

32.1

10

Specialist offices

Rental/SF/ PA

50

40

50

20

45

45

40

40

20

20

37

11

Hotels/ Condos, Five star urban

$/ bed/ night

350

350

300

180

300

125

220

375

220

190

261

12

Hotels/ Condos, Five star low-rise All values

bed/ night in$/US$

350

350

300

140

300

130

220

235

160

150

233.5

13

Hotels/ Condos, Three star economy

$/ bed/ night

100

150

150

60

150

110

110

85

70

60

104.5

22

MARKET TREND

REPORT


Indicators for Sales and Rental Values:

BCQS


Average Construction Costs by Country: The following graph represents construction cost by jurisdiction and their relationship to one another. Using St. Lucia as base (1.00), we can therefore see, that costs in Jamaica are the lowest at a factor of 0.67 (-0.33), and that costs in the Turks and Caicos are the highest at a factor of

24

MARKET TREND

REPORT

1.29 (+0.29). This also demonstrates that whilst Jamaica and Turks and Caicos are geographically only 400 miles apart, the cost of construction in the Turks and Caicos Islands is double that of Jamaica. A similar, albeit less pronounced, relationship exists between Barbados and Trinidad.


Bid Environment: The Bid Environment can be categorised into five scenarios as per the following table:

Research suggests that the current Bid Environment in each jurisdiction can be identified as follows:

BCQS


Forecast Escalation:

The forecast

26

MARKET TREND

REPORT

of costs is by no means an exact science, and depends heavily on the source of information procured. Not only must local markets be researched and considered, but also those global markets which directly affect the construction markets in the Caribbean region. This is especially true of those countries within and without the region which manufacture raw materials as well as finishes items. Therefore, influences are truly global, inasmuch that whilst, traditionally, materials and goods have generally been procured from fellow Americas markets, raw and finishes materials are now also imported from countries such as Indonesia and China in the far east to European countries such as Italy and Germany for specialist finishes items such as kitchens and tiling. In order to arrive at the following forecasts, we have therefore considered world markets as well as our local markets, where we have researched basic costs of materials, plant and labour as well as analysing indicative construction costs.


BAHAMAS

TURKS &

CAYMAN

JAMAICA

BVI

ST. MAARTEN

ST LUCIA

B’BADOS

TRINIDAD

CURACAO

AVERAGE

CAICOS CONSOLIDATED LABOUR, PLANT AND MATERIAL 2010

0.20%

0.20%

0.20%

0.20%

0.30%

0.20%

0.20%

0.20%

1.20%

0.50%

0.30%

2011

3.30%

2.80%

3.50%

3.50%

3.80%

3.50%

3.50%

3.50%

4.50%

3.50%

3.50%

2012

1.40%

1.40%

1.60%

1.40%

1.90%

1.60%

1.60%

1.90%

1.90%

1.90%

1.60%

Notes: Cost research on an ongoing basis includes, but is not restricted to the following cost elements, which represent common costs of construction with-

in the region. A weighting has then been applied to

MATERIAL • 8’’ Hollow-core Concrete Block • Ready-mix Concrete 4000 psi pump mix • Washed Concrete sand • Aggregate, 3/4 ‘’ • Cement • 3/4’’ rebar • 5/8’’ plywood • 30lb Roofing Felt • 2’’ x 8’’ pressure treated rafter • Plaster Sand • 1/2’’ regular sheetrock • Semi-gloss latex based white paint • 16’’ x 16’’ ceramic floor tiles • Hollow-core flush door 3’ 0’’ x 6’ 8’’ • Copper tubing 3/8’’ diameter

PLANT • Dump truck -12 cy • Backhoe • D3 • Excavator, 20 tonne

proportion the percentage of the value of each element against a notional whole project cost:

LABOUR • Labourer, non-skilled • Skilled carpenter • Steel fixer • Painter/ finisher • Tiler • Mason (excl. helper) • Plumber (excl. helper) • Electrician • Foreman/ Supervisor

BCQS


Mitigating Risk by Chris Docherty

From

28

MARKET TREND

REPORT

individuals building their own homes, through governments improving schools and infrastructure, to large corporations developing office, retail or commercial property, the mitigation of risk has always been key to the success of any construction project. In the current economic climate, with greater enforced demands upon private and public developers alike, it is now more important than ever for the detailed examination of project risk from the very inception stage of any type of development. This early planning helps to ensure a smoother construction process and increases the probability of successful project completion.

Most critical decisions relating to the development of a project are made at the concept stage, when only limited information is available. It is at this stage that it is essential to seek expert advice which will help form the success or otherwise of any construction project. It is by mitigating the risk at this level that can save a developer money, time, resources, and unnecessary problems during the construction process. The failure to analyse and allocate risk at concept stage is often a result of the misguided belief that such mitigation is an unnecessary expenditure to a project. Such problems or disputes can be varied, but most commonly involve the same two recurring themes, namely the unexpected and unplanned expenditure of further time and money. Independent professional expertise helps a Client to understand the costs involved and the contractual implications of decisions before they are made, thereby ensuring that the construction process is as equable as possible. By getting involved at project inception, BCQS can help to guide a design team through common and specific project risks, including budgetary issues, design alternatives, and value engineering.


Robust cost planning coordinated with design development is essential. The procurement route taken and the contract chosen should be workable for the particular project in its particular environment and be sure to protect the Client from unnecessary risk. The Appointment of the most suitable contractor with a complete design and a firm and realistic price can only benefit a project throughout the build. The processes put in place at pre-contract stage will always have a great influence on a project throughout its post-contract lifespan. Furthermore it is essential for any developer to have an experienced representative administrating the contract and controlling the payments and cost implications throughout the post contract stage. There is always going to be risk. However, the success or failure of any construction project depends upon the proper mitigation and removal of unnecessary risk and the allocation of remaining risk to those best suited to hold it. Thereafter, effective post contract monitoring and control help to mitigate risk throughout the construction life of a project. Although every project has its own particularities and nuances,

our advice in all instances would be to start an early relationship with a professional cost consultancy, that knows the jurisdiction, knows construction and knows how to protect its clients in a market which is often overwhelming. A consultancy like BCQS International.

BCQS


About BCQS

BCQS

has true multi-jurisdictional reach and is incorporated independently in the Bahamas, Barbados, British Virgin Islands, Cayman Islands, St Lucia and the Turks and Caicos Islands. Established in 1969, we have earned a leadership position in our field and we offer a comprehensive range of services, including but not restricted to: • • • • • • • • • • • • • •

30

MARKET TREND

REPORT

Project Management; Quantity Surveying; Construction Management; Cost Management; Property Valuations and Appraisals; Due Diligence Analysis; Loan Monitoring; Feasibility and Market Studies; Risk Analysis; Value Engineering; Life Cycle Costing; Developer Representation; Distressed Property Solutions; Insurance Claims Consulting/Loss Adjusting.


BCQS

Our projects include prestigious residential properties, large-scale commercial buildings and offices, civic and government buildings, hotels and resorts, and apartments and condominiums. We are approved consultants for the British Government’s Foreign and Commonwealth Office, the Department for International Development (DFID), the Caribbean Development Bank, and for European Union funded projects. Our appraisal services are prepared using the Royal Institution of Chartered Surveyors’ (RICS) guidelines and the majority of our professional staff are members of the RICS, a 140,000 member organisation representing property interests worldwide. We are approved con-

sultants for major banks in the region such as Scotiabank, First Caribbean International Bank, Royal Bank of Canada and Butterfield Bank, as well as other leading international institutions such as Textron Financial, Banco Popular, First Bank and Barclays Bank. We believe in the professional development and management of our clients’ property portfolios and our mission is to ensure that every client receives the greatest value for money along with unsurpassed service. If you believe that BCQS could be of service to you, we would welcome the opportunity to discuss your project requirements. Our contact details, country by country are detailed at the front of this report. We look forward to hearing from you.


Weights and Measures: There is no regional pattern of quantification within the region in terms of metric or imperial systems. The following is intended as a guide to the conversion rates of the most common units of measurement within the construction industry in the region.

Metric

32

MARKET TREND

REPORT

Length 1 millimetre (mm) .0394 in 1 centimetre (cm) 10 mm .03937in 1 metre (m) 100 cm 1.0936 yd 1 kilometre (km) 1000 m .6214 mile Area 1sq cm (cm²) 100 mm² .1550 in² 1 sq metre (m²) 10000 cm² 1.1960 yd² 1 hectare 10000 m² 2.4711 acres 1 sq km (km²) 100 ha .3861 mile² Capacity/Volume 1 cu ccm (cm³) .0610 in³ 1 cu decimetre (dm³) 1000 cm ³ .0353 ft³ 1 cu metre (m³) 1000 dm³ 1.3080 yd³ 1 litre (litre) 1 dm³ 1.76 pt 1 hectolitre (hl) 100 litre 21.997 gal Mass (weight) 1 milligram (mg) .0154 grain 1 gram (g) 1000 mg .0353 oz 1 kiligram (kg) 1000 g 2.2046 lb 1 tonne (t) 1000 kg 09842 ton

Imperial Length 1 inch 2.54 cm 1 foot 12 in .3048m 1 yard (yd) 3 ft .9144m 1 mile 1760 yd 1.6093km Area 1 sq inch (in²) 6.4516 cm² 1 sq foot (ft²) 144 in² .0929 m² 1 sq yard (yd²) 9 ft² 0.8361 m² 1 acre 4840 yd² 4046.9 m² Capacity/Volume 1 cu inch (in³) 16.387 cm³ 1 cu foot (ft³) 1728 in³ .0283 m³ 1 fluid ounce (fl oz) 28.413 ml 1 pint (pt) 20 fl oz .5683 litre 1 gallon (gal) 8 pt 4.5461 litre Mass (weight) 1 ounce (oz) 437.5 grains 28.35 g 1 pound (lb) 16 oz .4536 kg 1 stone 14 lb 6.3503 kg 1 ton 20 cwt 1.016 t


*Notes: Building types referred to in cost indicator sections are as follows:

1.00

Block and steel construction, pitched shingle roofs on sarking, cedar doors and windows, wood finish or porcelain floor tiling, solid surface countertops, electrical, hot and cold plumbing

2.00

As above but with ceramic floor tiling, fiberglass shingle roofing, laminated plastic countertops, standard jalousie windows, electrical hot and cold plumbing

3.00

Block and steel walls, sheet metal roofing, ceramic floor, aluminium jalousie windows, outside laundry tubs, cold water plumbing with electrical

4.00

Walled and metal sheet roofed, electrical and water

5.00

Open plan, bathrooms, glass storefront

6.00

Shell only partitioned, staircase, package units A/C, bathrooms, doors and aluminium windows

7.00

Fitted out partitioned, staircase, package units A/C, bathrooms, doors and aluminium windows

8.00

As above shell only, with elevators

9.00

As above fitted out, with elevators

10.00 Including medical centres, laboratories, restaurants, etc. 11.00 Five-Star high rise urban 12.00 Low rise Five-Star resort with normal facilities 13.00 Low rise Three-Star economy hotel with normal facilities

BCQS


34

MARKET TREND

REPORT

This report is intended as a guide only. Should the reader

hire companies etc. throughout our named jurisdictions;

require detailed construction advice, then the services of a

professional RICS accredited and professionally indemnified

erence to it may be included in any published document,

Quantity Surveyor should be sought. BCQS International Ltd

circular or statement nor published in any way without BCQS

accepts no responsibility for results of the actions of individu-

International Ltd’s written approval of the form and context

als acting directly through the findings of this report;

in which it may appear;

Whilst we have made every effort to ensure that all rates

Neither the whole nor any part of this report or any ref-

BCQS International Ltd gives no warranty, representation

and statistics herein are accurate, BCQS International Ltd

or assurance that the statements, conclusions and opinions

accept no responsibility for the accuracy of the sources of

expressed or implied in this report are accurate or valid.

such rates and statistics;

BCQS International Limited has prepared this report without

any acceptance or responsibility on their part to agents out-

Sources have been referred to where appropriate.

Although extensive research has been carried out in the

side of the employ of BCQS International Ltd.

compilation of this report, much of it has been generated in-

house, and not all references have been named. We hereby

should be regarded as valid for a limited period of three

extend our thanks to those sources known to us through pro-

months, after which they will be subject to re-examination.

fessional relationships, suppliers, employment brokers, plant

Due to current volatile financial markets, our findings


BCQS

BAHAMAS

C AY M A N I S L A N D S

BARBADOS

S T. L U C I A

BRITISH VIRGIN ISLANDS

TURKS AND CAICOS ISLANDS


36

MARKET TREND

REPORTC AY M A N

BAHAMAS

ISLANDS

BARBADOS

S T. L U C I A

BRITISH VIRGIN ISLANDS

TURKS AND CAICOS ISLANDS


BCQS Market Trend Report 2010  

Construction Market Trend Report 2010

Advertisement
Read more
Read more
Similar to
Popular now
Just for you